Sirer on Bitcoin

mequotesbitcoineconomicsmargins

04 Mar 2014

Emin Gün Sirer on Bitcoin:

Even if the Bitcoin protocol were perfect, and it isn’t, our computing infrastructure is not up to the task of handling high-value transactions. The exchanges are built on the latest hyped technologies that have incredibly poor guarantees, and routinely run into technical problems. They require full trust for their operation and are open to attacks from insiders and out. In a world where secret agents are hopping across machines and networks, keeping coins safe in a computer is a losing battle. Even if you keep everything in cold storage, laptops and phones can be infected with malware that steals coins when they come out of cold storage…

…As far as I’m concerned, the only winning move is to not play this game.

This is a narrow-minded criticism which has already in fact been disproven. Bitcoin is already being used as method of payment for thousands of transactions. Clearly, at some level, the market is able to bear some of the risks that Sirer enumerates. The truth is that there are no absolutes, only tradeoffs. As the Bitcoin network continues to develop, market participants will actively assess both the value and the risk of using Bitcoin so that they can make their own trade-off determination. Sirer has taken the liberty of making a trade-off determination for everyone. He may be right that some market participants will determine that there is no safe level use of Bitcoin. On the other hand however, many, as they already have, will determine that they are willing to bear the risks of using Bitcoin, whatever they may be. Finally, there will always be a margin somewhere between these two parties, with the invention of yet un-imagined technology being a major force that pulls new users across the margin and into the world of Bitcoin.